Coalitions difficult to forge in Spain's volatile Basque province. Resignation, elections add to already deep divisions

The election in Spain's violence-ridden Basque province has backfired on the Socialist government - and on its conservative opponents, too. The first casualty of the regional elections was Manuel Fraga Iribarne, leader of the conservative Popular Alliance Party. Mr. Fraga, whose party is the largest opposition group in the Spanish parliament, resigned after his party's poor showing in the Nov. 30 Basque contest.

Although the Socialists won the Basque elections, they fared only slightly better. They failed to gain an absolute majority and now must forge a coalition with the Basque nationalists, who regard the Socialist Party of Prime Minister Felipe Gonz'alez as an alien intruder in their closed society.

A main factor in the Socialists' win is that the hostility with which the Basques have traditionally viewed Madrid has now turned inward.

Before the election campaign, the Basque armed separatist group ETA broadened its campaign of kidnappings and murder to include more than its usual targets, policemen and Army officers. ETA gunmen murdered a former comrade who had taken up the government's amnesty offer so that she could raise her children. They also kidnapped an older businessman who was an official in the Basque National Party. Until the kidnapping, the conservative Basque National Party had never condemned ETA.

The result was that the electoral campaign divided the Basques both politically and emotionally.

One of the fiercest critics of Txiqui Benegas, the Socialist Party candidate for regional president, was his own sister. She supported the ETA's political wing, Herri Batasuna.

Many observers here say the Socialists won the election because the ruling Basque National Party - whose influence has permeated the regional government so much that the party song has been made the official Basque anthem - was shattered by quarrels. During the election, leading party defector Carlos Garaicoetxea accused the Basque National Party of using the regional police to tap his telephone and deface his campaign posters.

Now the danger is that unless the Socialists can convince several nationalist parties to bury their grudges and join them in a coalition, the Basque province - on top of its problems of terrorism and economic recession - will become ungovernable.

Nationally, the Socialists have an even greater worry with Fraga's resignation from the conservative party. The Socialists say that a fragmented Popular Alliance can only drive the right-wing voters - those who are nostalgic for the Franco dictatorship era - toward the ultra-extremist parties. It could also make the Army's more reactionary officers all the more restive.

One Socialist policymaker said: ``It's in our interests to have a conservative opposition that is strong and stable.''

Although the reason Fraga gave for his resignation was his party's dismal results in the Basque province, his grip had been slipping since this summer. In the June general election, the Popular Alliance did poorly, and the defeat left many party officials clamoring for Fraga's dismissal. The party was also bankrupt; the telephone company has pulled out all but a few phones from their Madrid headquarters because the conservatives have not paid their bills.